Conflicting skill sets for Investors

Morgan Housel writes about the skill sets required by investors and how they are at odds with each other. Housel reminds us that F. Scott Fitzgerald said intelligence is “the ability to hold two opposing ideas in your head at the same time and still retain the ability to function.” It’s so hard to do. But there are all kinds of examples of when it’s necessary in investing.

Getting rich requires the willingness to take big risks. Staying rich requires the paranoia to avoid big risks.

Trusting your gut means there are true things that you can’t articulate. Being sceptical of your biases means knowing that you confidently articulate things that aren’t true.

Being contrarian requires taking a stance most people don’t agree with. Being reasonable requires realizing that most people, as a group, are smarter than you.

Being patient requires the ability to endure periods of loss. Raising money, in the investing industry, often requires avoiding periods of loss.

Having confidence means staying with an idea when it’s not going well. Having humility means abandoning an idea when it’s been proven wrong.

Managing employees requires giving them structure and oversight. Maintaining employees requires giving them freedom and autonomy.

Being competitive requires giving work 100% of your effort. Beingsustainability competitive requires enough rest and variety in your life to avoid burnout.

Being focused requires tuning out the noise. Being informed requires reading as much as you can to ensure you don’t miss something important.

Discipline requires following a strategy when you’re tempted to break the rules. Adaptability requires realizing when your rules have lost relevance.

Housel concludes that these all have a common denominator: They require you to be open-minded, question assumptions, and never become too comfortable. Now we know why investing can be such a difficult but rewarding activity.